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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-11956
________________________
D.C. Docket No. 6:16-cv-02156-CEM-GJK
SUSAN MARTINEZ,
Plaintiff - Appellant,
versus
MARKET TRADERS INSTITUTE, INC.,
MARKET TRADERS INSTITUTE FINANCIAL, INC.,
NEXT STEP FINANCIAL HOLDINGS, INC.,
EFOREX, INC.,
now known as Easy Eforex, Inc.,
FX CURRENCY TRADERS, INC., et al.,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(December 6, 2018)
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Before TJOFLAT, MARCUS, and NEWSOM, Circuit Judges.
PER CURIAM:
This case involves RICO claims that grow out of an ugly, protracted, and
hotly contested divorce action—in which (oddly, but importantly as it turns out)
numerous family businesses were named parties. Susan Martinez and her former
husband, Jared Martinez, commenced their divorce proceeding in the Florida state
courts in 2009 and eventually finalized their divorce in Flagler County, Florida
Circuit Court in March 2018. Separately, Susan filed this RICO action in federal
court against a host of individuals and business entities asserting, as relevant here,
that one of the family businesses—Market Traders Institute, Inc. (“MTI”)—
engaged with others in a conspiracy to commit mail fraud, wire fraud, and
financial-institution fraud, which in turn harmed her 50% ownership stake in MTI.
The various family-member and family-business defendants responded, in part, by
contending that Susan had surrendered her ownership interest in MTI, effective
May 2010—years before filing her RICO action—as part of an earlier phase of the
divorce proceeding, and that she therefore lacked the requisite standing to pursue
her RICO claims. The district court agreed and dismissed Susan’s suit.
Because the stock-ownership issue has since—indeed, quite recently—been
finally adjudicated in the state-court divorce proceeding, we hold that Susan is
collaterally estopped from relitigating before us the issue whether she retained an
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ownership interest in MTI. And because we defer to the state court’s no-
ownership determination, we conclude that Susan does not have the necessary
standing to pursue her RICO claim in this court and therefore affirm the district
court’s order dismissing her case.
I
MTI was created by Susan Martinez and her then-husband Jared Martinez in
2002: each owned a 50% interest in the company. Seven years later, Susan filed
for divorce in Seminole County, Florida Circuit Court. On May 4, 2010, they
entered into a Partial Settlement Agreement (“PSA”) in which Susan agreed to
assign to Jared all of her “stock, ownership, and rights in MTI.” The PSA required
Jared, in turn, to assign the stock, ownership, and associated rights to the couple’s
sons. On May 7, the state court presiding over the divorce proceeding entered a
Stipulated Order Approving the Partial Settlement Agreement. The Stipulated
Order provided, in part, that “all of the stock in MTI assigned from Susan Martinez
to Jared Martinez shall be held in escrow by the Special Master until the payment
for that stock has been accomplished in full.”
In February 2011, however, before the parties fully performed the stock
assignment, Susan voluntarily dismissed the Seminole County proceeding. She re-
filed shortly thereafter in Flagler County, Florida Circuit Court.
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The Flagler County proceeding (finally) came to a close in March 2018 after
a three-week bench trial. Significantly here, the resulting Bifurcated Final
Judgment of Dissolution of Marriage incorporated an earlier August 2017 Order
Granting Motion to Enforce Partial Settlement Agreement and Martial Settlement
Order. That Order stated that the May 2010 PSA, pursuant to which the share
transfer was effectuated, was “entered into freely, voluntarily and knowingly” by
the parties, and that it had never been vacated or set aside. The August 2017 Order
further held, definitively, that “Susan validly transferred her shares in MTI to Jared
effective as of May 7, 2010.”
II
As already explained, the federal district court dismissed Susan’s amended
RICO complaint for lack of standing: she now appeals the district court’s decision
that she lacked both Article III and statutory standing. We do not assess her claim
in a vacuum, however; rather, we take into consideration her divorce proceeding in
state court and the effect that determinations made there might have on issues
pending before us.
Issue preclusion—or “collateral estoppel”—precludes a litigant from re-
litigating an issue that was actually litigated in an earlier action to a final judgment
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between the same parties, provided that the issue in both proceedings is in fact the
same. See B & B Hardware, Inc. v. Hargis Indus., Inc.,
135 S. Ct. 1293, 1302–03
(2015) (explaining the elements of issue preclusion); see also Pearce v. Sandler,
219 So. 3d 961, 965 (Fla. 3d Dist. Ct. App. 2017) (“[C]ollateral estoppel, also
known as issue preclusion, applies where: (1) the identical issues were presented in
a prior proceeding; (2) there was a full and fair opportunity to litigate the issues in
the prior proceeding; (3) the issues in the prior litigation were a critical and
necessary part of the prior determination; (4) the parties in the two proceedings
were identical; and (5) the issues were actually litigated in the prior proceeding.”)
(citation omitted). Because Susan’s divorce proceeding and the resulting judgment
occurred in the Florida courts, we apply Florida law to determine whether to give
preclusive effect to issues embodied in the state court’s judgment. See Cmty. State
Bank v. Strong,
651 F.3d 1241, 1263 (11th Cir. 2011).
Here, it is clear that both the state-court divorce proceeding and Susan’s
federal RICO action involve the same issue, namely, Susan’s alleged ownership of
MTI stock—the former to resolve a dispute about an underlying marital asset, and
the latter to address Susan’s continuing standing to sue. It is also clear that the
issue of Susan’s MTI stock ownership was actually litigated in the divorce
proceeding. Before entering the August 2017 Order, the Flagler County Circuit
Court held an eight-hour evidentiary hearing to determine whether Susan was
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bound by the May 2010 PSA. Finally, it is clear that a final judgment was issued
in the state-court proceeding in March 2018, and that the judgment explicitly
incorporated the August 2017 Order, which (as already noted) held in no uncertain
terms that “Susan validly transferred her shares in MTI to Jared effective as of
May 7, 2010.”
The sole remaining question, then, is whether the parties are the same in
both suits. Under Florida law, collateral estoppel requires “mutuality”—or
sameness—of parties. Amador v. Fla. Bd. of Regents ex rel. Fla. Int’l Univ.,
830
So. 2d 120, 122 n.1 (Fla. 3d Dist. Ct. App. 2002); see also Stogniew v. McQueen,
656 So. 2d 917, 919–20 (Fla. 1995). With respect to most of the parties at issue
here, even the strictest mutuality requirement is satisfied. Each named
defendant—including the family-business entities—was a party to the Flagler
County divorce proceeding, save two. Only Joshua Martinez (who was dismissed
from the federal RICO suit on Susan’s motion) and Lisa Estrada were named in the
federal RICO suit but were not parties to the state-court divorce proceeding.1
1
The RICO suit names, along with Joshua Martinez and Estrada, the following defendants: Isaac
Martinez, Jacob Martinez, Market Traders Institute, Inc., Market Traders Institute Financial, Inc.,
Next Step Financial Holdings, Inc., EFOREX, Inc., FX Currency Traders, Inc., I Trade FX, LLC,
Institutional Liquidity, LLC, and Navitas Investments, LLC. Each of these defendants was also a
named party in the divorce proceeding in Flagler County.
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Florida courts, like most others, recognize exceptions to the requirement that
parties be identical. 5F, LLC v. Dresing,
142 So. 3d 936, 947 (Fla. 2d Dist. Ct.
App. 2014). One of those exceptions, applicable here, is “privity.” In Florida, “[a]
person who was not a named party to [a prior] action will nonetheless be subject to
collateral estoppel arising from that action if that person was in privity with a
party” in that action. Cook v. State,
921 So. 2d 631, 635 (Fla. 2d Dist. Ct. App.
2005). Privity is a “flexible legal term” that applies “when a person, although not a
party, has his interests adequately represented by someone with the same interests
who is a party.”
Id. (quoting E.E.O.C. v. Pemco Aeroplex, Inc.,
383 F.3d 1280,
1286 (11th Cir. 2004)).
Estrada and Joshua are both covered by the privity exception to the
mutuality requirement. Estrada was the Chief Compliance Officer of I Trade FX,
LLC, a named defendant in both proceedings. Likewise, Joshua acted as the
president, director, secretary, and treasurer of Next Step Financial Holdings, Inc.,
also named in both proceedings. There is no reason to think—and none has been
supplied to us—that their interests would have diverged in any way from those of
their named-party companies. Moreover, and in any event, Susan’s federal RICO
suit makes no allegations against Estrada, and (as already noted) Susan voluntarily
dismissed Joshua from her RICO action.
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Because all of the named defendants in Susan’s RICO action were either
named parties in the state-court divorce proceeding or in privity with parties named
in that proceeding, collateral estoppel bars Susan from relitigating in federal court
the issue of her MTI ownership, which was fully and finally adjudicated in state
court. And once we defer, as we conclude we must, to the state courts’
determination that Susan relinquished her MTI stock in 2010, we are constrained to
hold, as the district court found, that she has no standing to pursue her RICO
claims. 2
AFFIRMED.
2
There is one loose end: There is no basis for Susan’s assertion that the RICO defendants
waived their preclusion arguments. Susan filed her federal RICO action in 2015; it was
dismissed by the district court in 2017. It was not until the state court issued a final judgment in
the divorce proceeding in March 2018 that collateral estoppel became a viable argument. The
RICO defendants raised the collateral-estoppel issue following the state court’s final judgment.
Regardless, courts may raise the issue of collateral estoppel sua sponte, particularly in a case
such as this one where collateral estoppel is wrapped up with the issue of standing. See, e.g.,
Akanthos Capital Mgmt., LLC v. Atlanticus Holdings Corp.,
734 F.3d 1269, 1272 (11th Cir.
2013) (“Even if the [appellees] had not raised their defense of res judicata, we would sua sponte
raise the issue. No prejudice results from our dismissal of this appeal because [appellants] ha[ve]
already fully and fairly litigated the identical complaint.”).
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